The Americas have overtaken China as the engine of the world’s luxury growth, according to a report by market research firm Bain & Company.
2013 statistics show that consumers of North and South America drove a bigger increase in luxury goods growth than anywhere else in the world - a fact which is backed by statistics from Euromonitor, which reveal that Latin America’s cosmetics market almost doubled in size since 2008.
Also highlighted by the research is the nosedive of the Japanese luxury market- despite the relative rebound of the country’s economy, consumption is predicted to decline by 12% due to the “sharp” depreciation of the yen.
The report describes the Americas region as the future “king of the luxury goods spending hill” – an analysis which is likely to have an effect on the bottom lines of companies which focus on this region.
A new center of gravity
The results confirm that whilst the overall growth momentum has firmly moved to the emerging markets, the new center of gravity can still quickly shift from region to region.
Euromonitor statistics show that whilst the continents are growing more quickly, China is still a giant luxury cosmetics market at over US$2.6bn in value and around 30% of luxury consumers now living in the region.
Ironically, one of the factors which drove the Americas overtaking China in luxury spending is the increasing number of wealthy Chinese visitors spending money in western US cities like Las Vegas and Los Angeles.
Overall, according to the company’s statistics, cosmetics, perfumes and “hard luxury” still make up a fairly small percentage of the market, with accessories such as leather products growing to become the largest segment.
Taking advantage of the new markets
Euromonitor’s 2013 beauty market report highlights the ways in which companies are responding to new developments in luxury cosmetics.
Beauty products are regarded as a sideshow to fashion in many countries, but that situation is beginning to flip around, with famous clothing houses such as Marc Jacobs and Tom Ford creating their own branded fragrances.
Euromonitor’s analyst Fflur Roberts, the head of luxury goods research, commented: “Whilst there is nothing new about fashion houses developing their own branded fragrances, what is new is luxury fashion houses ramping up exposure across the full beauty care remit to include products such as nail polish, lipstick, eye and facial make-up, body lotions, self-tanners, even bath and shower products.”